SBF allegedly used FTX money to invest $400M in obscure VC firm

Authorities in america might need found one more attainable element of Sam Bankman-Fried’s (SBF) cryptocurrency empire.

U.S. federal prosecutors have alleged that Bankman-Fried has used cash from FTX change to spend money on the enterprise capital agency Modulo Capital, in accordance with a report by The New York Instances.

As beforehand reported, SBF’s hedge fund and FTX’s sister agency, Alameda Analysis, invested a complete of $400 million in Modulo in 2022, which turned one of many largest investments by SBF. The funding has drawn explicit consideration from regulators as a result of Modulo — which is a comparatively unknown agency — elevating a considerable quantity of capital throughout robust occasions for the crypto market.

In line with the most recent findings by SBF’s investigators, the Modulo funding was doubtless made utilizing legal proceeds or misappropriated cash that FTX clients had deposited with the change.

The prosecutors stated that Modulo has emerged as an necessary a part of the investigation as FTX attorneys at the moment are reportedly eyeing Modulo’s property as they scramble to recuperate the billions of {dollars} from repaying their clients, traders and different collectors. To date, the whereabouts of SBF’s $400 million funding is unclear.

Modulo Capital was based in March 2022 by three former executives at Jane Road, a New York-based agency that after employed Bankman-Fried and Alameda CEO Caroline Ellison. One of many founders, Duncan Rheingans-Yoo, was reportedly solely two years out of school. One other Modulo co-founder, Xiaoyun Zhang, often known as Lily, was a former Wall Road dealer who had some ties with SBF. Modulo can be recognized to run its operations from the identical Bahamian apartment group the place SBF resided.

Associated: Breaking: BlockFi uncensored financials reportedly exhibits $1.2B FTX publicity

The information comes amid U.S. commissioner for Commodity Futures Buying and selling Fee, Christy Goldsmith Romero, questioning the due diligence work achieved by VCs and cash managers who funded FTX. “Why did they flip a blind eye to what ought to have been actually flashing crimson lights?” Romero requested.

Beforehand, the deputy prime minister at Singapore’s government-owned funding agency Temasek admitted that their funding in FTX precipitated “reputational injury” for the agency.